Lib Dem councillor attacks Wealth Tax

In a letter published in the Evening Standard yesterday (tiresomely, their letters are not available online) Cllr Papworth says:

Everybody wants fair taxes, but "wealth" taxes such as Nick Clegg has proposed risk hitting ordinary people in many parts of the UK who have saved for their pensions or who own a family home.

Rather than trying to squeeze more out of the top one per cent, 10 per cent or100 per cent, Lib Dems in government should prioritise reducing tax rates for everybody while reducing the regulatory burdens facing entrepreneurs.

Vince Cable wrote in the Orange Book eight years that no one on the income distribution scale should pay tax of more than 50 per cent – something that he and Clegg seem to have forgotten since they got into government.

Spotting my well thumbed copy of the Orange Book, and taking it off the shelf, I can confirm that Cllr Papworth is quite right.

This is what Mr Cable had to say:

From an economic liberal standpoint, a key issue is how much freedom individuals enjoy in spending their own money. Penal rates of tax destroy that freedom. There is no absolute standard by which to gauge what are "excessive" rates of taxation; much depends on controls and past experience. But two rather simple guiding principles should apply. The first is that the state – national government – should not take more than, say, 40% of GDP in tax (currently the share is close to this level). The second is that marginal rates of direct taxation should not exceed 50% at any point in the income range.

Incidentally, there was a lot of other good stuff from Mr Cable back in 2004. The Lib Dems should "pull no punches" on the "major problems" with the EU in terms of it obstructing free trade. He wanted to abolish the Department of Trade and Industry – along with the trade missions and the subsidies it handed out: "A misguided non-economic belief that Government salesman and taxpayer's money 'save' or 'create' jobs." He demanded bold deregulation: "What often seem desirable measures in isolation are becoming, cumulatively, very onerous."

It would seem that Mr Cable has ditched his liberalism (assuming he was sincere eight years ago). Yet there is far more state spending and red tape than there was then and far more EU restrictions on trade.

In some ways I would be delighted if Cllr Papworth and the other classical liberals defected to the Conservative Party. But isn't there something rather heroic about them keeping up a lonely fight for liberalism within the Liberal Democrats? That are still a few voices who believe, as Gladstone believed that, "money should fructify in the pockets of the people."